Portal Plays Soothe Pain of Divorce

Written By: D. Geller

Published: July 18 2000

Portal Plays Soothe Pain of DivorceD.
Geller
- July
18, 2000

Event
Summary

The big news was Yahoo's sudden divorce of Inktomi for younger rival Google.
Inktomi has been the search engine powering Yahoo's off-directory searches
since the beginning of Internet time. Both Inktomi's pride and its stock
price were wounded, but the company says that the implications for its
long-term financial picture are mild.

One
reason for Inktomi's optimism is that Yahoo has invited it to power the
searches in a newly announced corporate portal venture. Corporate Yahoo
takes Yahoo and partner Tibco Service behind the corporate firewall with
a fee-based product that will present corporate information in combination
with selected feeds of Yahoo's currently available content such as weather,
news and stock quotes.

The
logic motivating Yahoo's entry into the portal space seems to be that
employees won't visit a corporate portal for the corporate information
they need to do their jobs without access to a wide range of the services
that are otherwise available for free elsewhere on the Internet.

Inktomi
also has a foot in the portal pie. The company recently announced that
it would build and donate a public portal that connects to all of the
information that individual U.S. government agencies have put online.
The portal, dubbed "firstgov.gov," is expected to save the government
$20 million in development costs.

Market
Impact

Call us cynical, but we don't believe that Yahoo's main motivation here
is to rack up profits from building corporate portals. There are a number
of software companies and systems integrators already in that business,
and it's a rare corporate portal that doesn't offer some of the kinds
of information content that Yahoo is offering. Despite Yahoo's name and
backing, we don't see this announcement as representing a transformation
of the corporate portal market.

A
steady stream of revenues from providing its otherwise free services will
be a nice enhancer to Yahoo's bottom line. But we do wonder what else
Yahoo has up its sleeve. Studies continue to show that employees spend
a large amount of time surfing, and not merely for sanctioned, job related
purposes. Can Yahoo make money by capitalizing on this almost captive
audience?

Few
corporations will want advertising by others - Yahoo's main source of
income - to appear on their own intranet. Yahoo may be looking forward
to mining revenues from various kinds of affiliate and profit sharing
schemes, but that doesn't seem likely to be a gold mine. Worse, if it
became a truly lucrative sideline there are plenty of competitors ready
and able to step into the wings and drive the returns down by offering
to share such fees with the corporate host. But don't get us wrong; we're
not planning to short sell Yahoo's stock.

User
Recommendations

There's a lot to consider in choosing a corporate portal provider. While
developers and service providers strive to make it seem easy, putting
up a corporate portal is thought and labor intensive. We agree that the
portal needs to attract and keep corporate users, but believe that the
main decision points in making a product decision should be the features
that the portal will provide for bringing information to employees and
the technology costs behind it.